BE AN ENTREPRENEUR CREATE OPPORTUNITIES
When you’ve decided to start your own business and ready to get your feet in the water, you need to incorporate as a business. Running your own business is exciting, thrilling, and challenging at the same time.
The first phase is to get registered as a business; making the right decision about choosing a corporation type is the most important action. We have seen many examples where after a certain time period when business owners were in phase of expansion, they were forced to shut down an existing corporation due to its wrong entity type. If you think your business has potential, then start off your business journey in the right way.
Business entities are dynamic and rely on business structures, such as LLCs, Corporations, etc. Each structure is designed to facilitate the uniqueness of corporate needs and goals. There are also tax and legal aspects to consider when choosing an entity.
We, with our IRS Enrolled Agents, have expertise in evaluating the best entity type according to your scenario in all 50 states of the US. We take time to sit down with you and have a detailed discussion about your goals, finances, nature of the business, available resources, and your own skills/expertise in order to give you the best advice.
Types of business entities are:
- Single Member LLC (Pass-through Entity)
- Multi-Member LLC / Partnership (Pass-through Entity)
Benefits of Owning a US Company
- The most efficient way to get into the US market.
- Easy introduction of products and services.
- Increased value of accessing venture capitalist firms and crowdfunding.
- Enhanced reputation worldwide of the US-based company.
- Helpful in US Visa processing to live and work (B1/B2, L1/L2, E1/E2, EB-5).
LLC taxed as Sole Proprietorship
As a Sole-Proprietor if you want an extra layer of liability protection against your personal assets, you form a Single-Member LLC. A Sole Proprietorship is when you are the only owner, or member, of your LLC. The LLC does not file a separate corporate return at the federal level and would not have to pay corporate taxes. You would still have to include additional forms on your personal return such as Schedule C. You may or may not have an annual reporting requirement from the state; it depends on the state.
LLC taxed as Partnership
A Partnership is when your LLC has more than one member, or partner. The LLC will file a separate corporate return at the federal level using Form 1065. Form 1065 is a separate return that will generate a Schedule K-1 form. The purpose of the K-1 form is to report each partner’s share of earnings, deductions, credits, and losses. This K-1 form would then be included into each of the partner’s individual tax returns. The state you file in may also have additional reporting requirements.
LLC taxed as a C-Corp
The tax treatment of an Single-Member LLC that elects to be treated as a C-Corp is the same as stated below under “C-CORP”
LLC taxed as an S-Corp
An S-Corporation classification is used when an LLC is converted into this status through approval by the IRS. S-Corps are not a separate business entity type, rather, they are considered to be a “tax designation”. This allows businesses to be exempt from having to pay corporate income taxes at the federal level. The net income and losses (if any) will then be passed on to the shareholders’ personal tax returns. S-Corp election must be filed with the IRS within 75 days of forming the company.
C-CORP taxed as an S-Corp
An S-Corporation classification is used when a C-Corp elects to be converted into this status through approval by the IRS. S-Corps are not a separate business entity type, rather, they are considered to be a “tax designation”. This allows businesses to be exempt from having to pay corporate income taxes at the federal level. The net income and losses (if any) will then be passed on to the shareholders’ personal tax returns. S-Corp election must be filed with the IRS within 75 days of forming the company.
A C-Corporation is separate business entity that is taxed separately from the directors or shareholders. This is the default entity type and will file a corporate return using Form 1120 at the federal level. The deadline to file this form is April 15th yearly for the previous year (January-December) in most cases. The ownership hierarchy is President, Directors, or shareholders, whereas an LLC has members.
LET US HAVE THE PRIVILEGE TO CATER YOUR NEEDS OF THE FORMATION OF YOUR OWN FIRST COMPANY IN THE UNITED STATES.
When it comes to company formation in the US as a non-resident. It is simple when you have the help of HQ TEAM which is skilled in company formation, immigration, and import-export. We have successfully structured the Formations of hundreds of business entities in the USA. Our proven services and deep knowledge of this complex area are available to make sure your structural needs have been accomplished.
For the US non-residents, it is not possible to incorporate their company as S- Corporation, as all S Corporation shareholders must be US residents. Instead, they can go ahead with Formation of a Limited Liability Company (LLC) instead of a corporation.